Federal grand jury indicts Ralphs

OFF THE JOB: Charlene Adams, a Ralphs worker, pickets in October 2003 after the store locked out its United Food and Commercial Workers members. Reed Saxon, The Associated Press

1 of 2

ALLEGATIONS: United Food and Commercial Workers Local 770 President Rick Icaza and U.S. Attorney Debra Wong Yang speak Thursday about the 53-count indictment against Ralphs Reed Saxon, The Associated Press

Feb. 29 :Union members overwhelmingly vote to approve the new contract, ending the strike and lockout.

March 1: Union drops lawsuit against Ralphs as part of settlement of strike issues. U.S. attorney's investigation continues.

July 29: The Register reports that Ralphs has admitted that some of its store managers allowed locked-out employees to return to work, citing a company memo obtained by the newspaper.

Nov. 17: The Register reports that the U.S. attorney has offered immunity from prosecution to Ralphs employees who were rehired if they cooperate with prosecutors, citing a letter obtained by the newspaper.

2005

Dec. 15: Ralphs is indicted.

Q. Why was Ralphs indicted?

A. Ralphs is accused of violating federal laws by, among other things, reporting false names and Social Security numbers for rehired workers to federal agencies, including the Internal Revenue Service.

Q. Why did Ralphs lock out its workers?

A. Ralphs had an agreement with two other supermarket chains, Vons and Albertsons, to negotiate as a team with the United Food and Commercial Workers union, which represents supermarket workers. After the union launched a strike against Vons in October 2003, Ralphs and Albertsons locked out their employees who were union members. All three chains kept their stores open by hiring replacement workers.

Q. Why did Ralphs rehire some locked-out workers?

A. When the labor dispute began, the union set up picket lines at all Southern California stores belonging to the three chains. A few weeks later, the union withdrew its picket lines from Ralphs, hoping to entice the chain to forsake its competitors and negotiate a private settlement with the union.

"Because senior management was not expecting the unions to stop picketing, Ralphs was ill-prepared for the increase in business at its stores," the indictment says. "Ralphs needed several hundred well-trained, experienced and reliable grocery workers who could operate its stores competently and efficiently perform necessary functions, such as receiving, bookkeeping, price integrity, stocking, rotating and displaying produce and cutting and displaying meat."

A. According to the indictment, Ralphs adopted a company policy in anticipation of the strike that said, "Under no circumstances should (store directors) knowingly hire members from the striking bargaining unit."

The indictment alleges that the term "knowingly hire" was adopted "to allow store directors to hire locked-out and striking employees if they could plausibly deny knowing" that applicants were locked-out Ralphs employees. Ralphs hired workers under false identities so that managers could plausibly deny knowing they were locked-out employees, prosecutors say. Ralphs denies the allegation.

Q. Why was it important that Ralphs not appear to be rehiring locked-out employees?

A. Ralphs had an agreement with Vons and Albertsons not to rehire any striking or locked-out employees from any of the stores. Also, by rehiring some of its own locked-out employees, Ralphs could have been found to be engaging a "selective lockout," which is illegal under the National Labor Relations Act. Such a finding by the National Labor Relations Board could have made Ralphs liable for back pay to all of its locked-out workers.

Q. Are any Ralphs employeesbeing prosecuted?

A. No Ralphs employees are named in the indictment. However, the indictment says that "Ralphs engaged in a company-wide course of criminal conduct which was intended to, and did, undermine the labor action." Ralphs' regional managers and store directors were given "tacit approval, if not encouragement, by Ralphs senior management to hire locked-out and striking employees as temporary replacement workers," the indictment says.

Q. What does Ralphs say?

A. Ralphs admits that its stores rehired about 200 locked-out workers under false Social Security numbers. However, Ralphs says the rehiring was done by individual store managers on their own initiative and wasn't part of a company-wide plan.

"Individuals were trying to help people who had worked for them who were suffering," Ralphs spokeswoman Lynn Marmer said. "Going 141 days without a paycheck is a very difficult circumstance." Ralphs adopted the "knowingly hire" policy not to tacitly encourage rehiring but because, "It's not really fair to discipline someone for taking an action when they didn't know," she said.

Ralphs says it has taken disciplinary action against the managers involved in the rehiring. The company adds it has cooperated with the federal investigation from the start.

Q. Does the indictment credit Ralphs for its claimed cooperation with investigators?

A. No. "When federal law enforcement agencies began to investigate Ralphs senior management first attempted to falsely minimize the extent of the company's illegal conduct, and then attempted to shift responsibility for that conduct to lower levels of management, falsely blaming store directors and others," the indictment says.

Q. What sort of punishment could Ralphs face?

A. Prosecutors said they could seek as much as $100 million in back pay for Ralphs 19,000 locked-out workers, plus other fines. However, the labor board's Los Angeles office has found that Ralphs did not engage in a "selective" lockout in violation of federal laws, Ralphs said. The union is appealing that ruling.

In a filing Thursday with the Securities and Exchange Commission, Kroger Co., Ralphs' parent, said it "does not expect the ultimate resolution of this matter to have a material effect on the financial condition of the company."

Q. What does the union say?

A. The indictment "vindicates our position all along," said Greg Conger, president of the union's Local 324 in Buena Park. "One side played fair during the strike, and another side took another route."

Rick Icaza, president of Local 770 in Los Angeles, said: "Tens of thousands of working families were harmed by Ralphs' illegal activities. Every single one of them must be made whole." The union alerted authorities to Ralphs' rehiring practices in 2004.

User Agreement

Keep it civil and stay on topic. No profanity, vulgarity, racial
slurs or personal attacks. People who harass others or joke about
tragedies will be blocked. By posting your comment, you agree to
allow Orange County Register Communications, Inc. the right to
republish your name and comment in additional Register publications
without any notification or payment.